Sometimes it pays to listen to the lawyers.
So here's what the personal injury lawyers tell their friends, and clients, and family and neighbors: Get your little driving gloves on as much uninsured motorist coverage as you can.
If you don't have uninsured motorist coverage (UM) on your auto insurance policy, buy it, they say. If you have it, jack that coverage up. Raise it by 5- or even 10-fold, say lawyers. The cost is minimal, the potential payoff huge.
"The little secret of auto insurance is that uninsured motorist coverage is very cheap," said Chuck Geerhart, a San Francisco trial lawyer who carries $1 million in uninsured motorist coverage. "The most expensive part of insurance is the first $15,000." Adding injury limits to $500,000 is "not more than $100 a year."
Why the urgency?
Nationally, an estimated 1 in 7 drivers is uninsured. That's 29.4 million people wielding two-ton weapons on public roadways, without a way to pay for the damages they cause. In some areas, the percentage is much, much higher. (See "Can you legally drive without car insurance?")
But forget the numbers. A better spur to protecting yourself is to understand exactly why there are so many uninsured drivers out there, and why their numbers are not likely to drop anytime soon.
Consumers are rational actors
It's tempting -- and understandable -- to curse uninsured drivers as inconsiderate scofflaws.
The scofflaw part is certainly true: Every state requires some kind of financial responsibility that pays the victim's damages. It is also unethical, most would agree, to put other people at such high risk.
But uninsured drivers may be making a simple cost-benefit analysis where the bottom line is: It's not worth it.
A calculation by CarInsurance.com found that in some cities a 24-year-old male with no traffic tickets and a good credit score would have to work more than a month at a minimum-wage job to afford the minimum level of required auto insurance coverage.
These young workers are hardly alone. Half of American workers now earn less than $26,000 a year; nearly a quarter of jobs pay below the federal poverty level for a family of four -- $22,000 a year. In a 2011 Gallup poll, nearly 20 percent of Americans said they had trouble putting food on the table sometime in the past 12 months.
Meanwhile, the nonprofit Consumer Federation of America (CFA) estimates that the average cost of the minimum level of liability coverage for low- and moderate-income car owners is $823.
Do the math, and millions of Americans really are faced with the worst of decisions: Car insurance or rent? Car insurance or food?
When push comes to shove
"If it was me, I'd rather eat than have a piece of paper that says I'm insured," says Bob Hunter, director of insurance for the CFA. "It's just silly to assume that these people can even afford it. What is the economic value to that person anyway, spending 10 percent of his income on car insurance?"
When CFA survey respondents were asked whether they knew an uninsured motorist, 22 percent of those with incomes between $25,000 and $50,000 said they did. Eight in 10 said those uninsured drivers needed a car but couldn't afford the insurance.
One unemployed college graduate, writing about her experience for the Gawker.com story "Hello from the underclass: unemployment stories, Vol. One," described how a friend had accused her of being unwilling to apply for a job at Target.
"HA. Until recently, we couldn't even afford the insurance for me to have a license to get to Target, and since I live in the 'burbs, there is no public transportation around me to speak of," the woman wrote. "When you can't even afford to get to the local Target, how can you be expected to snap up a job?"
The end result is that millions of people decide to take the risk.
Little risk, little benefit
"They're making wise economic decisions," says Hunter, a former Texas insurance commissioner. "They're judgment-proof anyway."
The person at fault in a car accident is legally required to pay damages, whether he has insurance or not. But if he can't pay, he can't pay. Few lawyers are going to invest the time to go after someone who doesn't have recoverable assets.
"As a personal injury lawyer, I have no interest in you," said Geerhart. "I'm not going to sue you, I'm not going to pursue you. You can't get blood out of a turnip."
On the criminal level, uninsured drivers do face fines, and they can lose their licenses. Many continue to drive anyway. In a handful of states, repeat offenders can even be thrown in jail, but in practice that rarely, if ever, happens.
Others eventually may wind up buying liability insurance, but even that is no guarantee that the people they hit will be fully covered -- or even close to it. State required minimums may be as low as $15,000 per injured person, and as low as $5,000 for property damage.
Protect yourself from the uninsured
"$5,000 won't fix much," says CarInsurance.com consumer analyst Penny Gusner.
Typically, uninsured motorist and underinsured motorist coverage is sold in amounts that mirror your own liability coverage. That is, if you have bought $15,000 per person bodily injury liability coverage for yourself, then the maximum amount of uninsured motorist bodily injury coverage you can buy is $15,000.
Gusner suggests uninsured motorist bodily liability limits of $100,000 per person and $300,000 per accident, the same limits she recommends for bodily injury liability coverage.
To illustrate the costs involved, we compared insurance rates for a 40-year-old male with an unblemished driving record owning a 2012 Honda Accord in Marietta, Ga. The policy includes comprehensive and collision coverage, but we compared varying limits for liability and uninsured motorist.
- For $25,000/$50,000/$25,000 liability coverages, but no uninsured/underinsured motorist coverage, the cheapest quote was $1,115 a year.
- Adding uninsured/underinsured motorist with coverage of $25,000/$50,000/$25,000 brought the least expensive quote to $1,225 a year.
- Bringing the owner's liability coverage up to $100,000/$300,000/$50,000 and matching those levels on uninsured/underinsured motorist, the cheapest quote was $1,274 a year.
Of course, rules vary by state. Many cap the amount of uninsured motorist property damage at a very low amount, Gusner says, meaning you might have to turn to your own collision coverage to get your car fixed.
And your own health insurance needs to enter the picture as well. Knowing what your health insurance company will and won't cover will help you determine what UM/UIM limits you should carry.